Driven by semi-annual index rebalancing

Market Review

Malaysia:. The FBM KLCI (+1.8%) trended sharply higher, largely boosted by the effect of semi-annual MSCI index review rebalancing yesterday. The lower liners, however, remained mixed, while the broader market ended mostly higher with the exception of the construction (-0.6%) and transportation & logistics (-0.1%) sectors.

Global markets:. Wall Street turned choppy as the Dow (-0.7%) snapped a six-day winning streak on lingering concern over the persistently high inflation and rising risk of recession due to the tightening of monetary policy. The European stock markets ended mostly lower, while Asia stock markets closed mixed.

The Day Ahead

The FBM KLCI was traded higher due to the MSCI semi-annual review and we noticed trading value surged above RM6.12bn for the session with positive foreign inflows. Nevertheless, we believe the global sentiment may remain tepid as (i) Ukraine-Russia tension persists and (ii) elevated crude oil price may continue to put soaring inflation in focus; these factors may limit the upside potential on the recent relief rebound. Commodities wise, the CPO traded around RM6,200, while the crude oil was priced above USD115 per barrel mark.

Sector focus:. Although Wall Street has retraced mildly on the back of profit taking activities, we expect traders to cherry picked stocks with decent momentum to trade going forward as values could be emerging around this zone. Also, investors may focus on recovery themed sectors such as banking, REITs and consumer.

FBMKLCI Technical Outlook

The FBM KLCI recovered from Monday’s losses as the key index jumped above its daily EMA60 level after a final-hour rally. Technical indicators turned positive as the MACD Histogram has formed a positive bar, while the RSI breached above 50. Should the key index hold above 1,570, next resistance is located around 1,580- 1,600, while the support is pegged at 1,530.

Company Brief

FGV Holdings Bhd’s 1QFY22 net profit stood at RM369.2m vs, a net loss of RM35.4m recorded in the previous corresponding quarter, mainly contributed by higher margins of palm products, the downstream segment, fertilisers and the logistics business. Revenue for the quarter expanded 72.6% YoY to RM5.85bn. (The Star)

AMMB Holdings Bhd’s (Ambank) 4QFY22 net profit stood at RM391.8m vs. a net loss of RM4.69bn recorded in the previous corresponding quarter that was impacted by one-off exceptional items totalling RM4.77bn that included the RM2.83bn 1Malaysia Development Bhd (1MDB) settlement. Revenue for the quarter, however, declined marginally by 0.9% YoY to RM1.12bn. (The Star)

Tenaga Nasional Bhd (TNB) has inked a coal import agreement with Indonesia’s coal exporters, involving imports worth US$3.00bn (RM13.14bn) for 3 years. This was up from US$2.30bn in 2021 due to a sharp increase in the price of coal. The agreement is aimed at ensuring sufficient coal supply, so that TNB’s electricity supply to the country is not disrupted. (The Edge)

Brahim’s Holdings Bhd will be delisted on 3rd June 2022, 28 years after the company was listed in 1994, following Bursa Malaysia’s rejection of the group’s appeal for more time to submit its regularisation plan. (The Edge)

Petronas has renewed Serba Dinamik Sdn Bhd’s (a unit of Serba Dinamik Holdings Bhd) licence to continue offering supply and services to the national oil and gas company and its contractors, effective 30th May 2022 for a one-year term. The licence stipulates that Serba Dinamik shall, within one year from the effective date, submit its audited financial statements for the financial year end 30th June 2022 duly accompanied by the auditor’s unqualified opinion. (The Edge)

PPB Group Bhd’s 1QFY22 net profit fell 24.6% YoY to RM303.2m, mainly due to losses totalling RM138.0m recorded by its grains and agribusiness segment. Revenue for the quarter, however, grew 23.6% YoY to RM1.38bn. (The Edge)

CIMB Group Holdings Bhd’s 1QFY22 net profit tumbled 41.9% YoY to RM1.43bn, mainly due to one-off non-recurring items booked a year ago and the recognition of the prosperity tax. Revenue for the quarter shrank 19.8% YoY to RM4.74bn. (The Edge)

Bank Islam Malaysia Bhd’s (BIMB) 1QFY22 net profit fell 33.3% YoY to RM105.9m, mainly due to higher net allowance for impairment on financing and advances. Revenue for the quarter, however, rose marginally by 0.4% YoY to RM774.0m. (The Edge)

Kenanga Investment Bank Bhd’s 1QFY22 net profit dropped 51.1% YoY to RM16.7m, due to lower contribution from brokerage fee income, as well as trading and investment income. Revenue for the quarter declined 26.1% YoY to RM184.9m. (The Edge)

Alliance Bank Malaysia Bhd’s 4QFY22 net profit jumped 105.8% YoY to RM103.0m, mainly due to higher interest income and lower operating expenses and credit cost. Revenue for the quarter gained 1.3% YoY to RM451.5m. A second interim single tier dividend of 10.2 sen per share, payable on 30th June 2022 was declared. (The Edge)

ATA IMS Bhd’s 4QFY22 net loss stood at RM29.2m vs. a net profit of RM26.9m recorded in the previous corresponding quarter, following the termination of its contracts with Dyson. Revenue for the quarter dropped 55.5% YoY to RM431.1m. (The Edge)

Panasonic Manufacturing Malaysia Bhd’s 4QFY22 net profit tumbled 65.4% YoY to RM15.8m, arising from the reduction of sales and production amid floods, higher operating expenses due to write-off of damaged inventories and repairs of affected facilities from the flood incident, restructuring costs of RM12.2m for the termination of the rice and cooker products and lower foreign exchange gain. Revenue for the quarter declined 21.4% YoY to RM208.8m. (The Edge)

Source: Mplus Research - 1 Jun 2022